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Midland Funding is a company that buys old credit card debts. But that’s just the tip of the iceberg.
If you go past due on a credit card debt, it’s going to be sold to another company. That’s how credit card companies make their money – by selling old debts that they can’t collect on their own.
The companies who buy old debts usually pay far less than face value for the account, so your $5,000 debt may be sold for as little as $500 depending on the exact nature of the account. Once the deal is done, the credit card company is out of the picture and only the debt buyer has the legal right to receive payment.
One of the major players in the debt buyer arena in Midland Funding, a unit of Encore Capital Group. Encore Capital, based in San Diego, is the largest debt buyer in the nation, buying enormous portfolios of charged-off debts each year in the hopes that it will be able to collect.
According to Midland’s website:

Midland Funding LLC is one of the nation’s biggest buyers of unpaid debt. Midland Funding LLC purchases accounts with an unpaid balance where consumers have gone at least 180 days without making a payment, or paid less than the minimum monthly payment.
Midland Funding LLC works with its affiliate, Midland Credit Management (MCM), to service accounts.

So there you have it – Midland Funding LLC buys the debts and hires Midland Credit Management to try to collect from you.
What Midland Buys When It Buys An Account
The problem isn’t that debts are sold to other companies, or that the new company hires someone else to collect from you. The issue is whether anyone really knows who owes what to whom.
When Midland buys old credit card debts, it wants to pay as little as possible because that will help boost its profit on each collected account. The credit card companies, however, want to get paid as much as possible so that they take less of a loss on their unpaid accounts.
To compromise, Midland (as well as just about any other debt buyer out there) buys nothing more than an electronic file of names, addresses and amounts due. The agreements covering these transactions allow Midland Funding to get more information, but it’s going to cost them more money – as much as $50 per account.
$50 isn’t a lot of money, but when you consider that Midland Funding is buying tens of thousands of accounts you can easily see how it can add up and cut into their bottom line.
The Midland Funding Business Model
Midland Credit Management will usually try to collect on a debt once Midland Funding buys the account, hoping that the consumer will voluntarily make a payment. Some people will pay the debt, others won’t.
If you don’t pay the debt when Midland Credit Management comes calling, then Midland Funding will take back the account and send it to a law firm. In California Midland’s primary outside law firm is Hunt & Henriques, though sometimes they keep the account in-house and use one of their own attorneys.
That happens a lot – in fact, during November 2014 alone Midland Funding and Midland Credit Management filed 193 collection cases in Los Angeles Superior Court alone.
In the vast majority of those cases (well over 90% of the time, in fact), Midland Funding gets a judgment for the entire balance they claim to be due.
Why Midland Funding Gets Judgments So Often
Most of the time, when someone is sued by Midland or another debt buyer, they fail to defend the case or show up in court.
With no opposition to the lawsuit, the judge grants a judgment in Midland’s favor. Once that judgment is issued, Midland can collect through wage garnishment, bank account levy, and other tactics.
That judgment, in California at least, can be renewed indefinitely. And once the judgment is issued, it’s difficult to get it lifted.
Why Defending A Midland Funding Lawsuit Makes More Sense
As I said, Midland Funding isn’t getting much in the way of documentation when it buys old debts. For example, it doesn’t get copies of the credit card application or statements.
In fact, Midland doesn’t get much proof at all when it comes to the debts it buys. Just enough to figure out who to sue and how much to claim as an amount due.
If you defend the credit card lawsuit when Midland Funding decides to sue, there’s a pretty good chance you’ll either get a very good settlement or win the case entirely. Because in the absence of any proof of their ownership of the debt or the amount due, Midland’s case falls apart.
States Have Noticed Midland’s Shoddy Practices
I’m not the only one who’s noticed how shoddy Midland is when it comes to filing credit card lawsuits with little or no proof.
In January 2015, New York State Attorney General Eric Schneiderman sued Encore (Midland’s parent company) over shoddy practices and forced Encore to pay a $675,000 penalty and vacate more than 4,500 court judgments against borrowers.
In 2012 the West Virginia Attorney General sued Encore “for using false affidavits when obtaining default judgments against West Virginia consumers and for failing to include information required by law when suing a consumer in magistrate or circuit court for an alleged debt.”
In 2011, the Minnesota Attorney General launched an inquiry into an Ohio class action against Encore for debt collection abuses after filing a lawsuit against Encore.
If You’re Contacted Or Sued By Midland …
It’s not hard to see why it makes sense to defend any credit card lawsuit that’s brought against you by Midland Funding, Midland Credit Management, or Encore. The company has a long history of playing fast and loose with the debt collection process, and there’s no reason to expect that your case would be any different.
Defending the lawsuit gives you the chance to force Midland to prove up the case, including answering the following questions:

• are you responsible for payment of the account?
• does Midland rightfully own the debt they claim they own?
• is the amount they claim to be due actually accurate?
• has the lawsuit been filed within the appropriate statute of limitations for collection of a debt?

It’s about making sure that you pay the proper people the proper amount of money, and not one dime more.

If you are thinking of filing bankruptcy without an attorney, please be aware of the following: the bankruptcy clerk and the bankruptcy judges are going to hold you to the same standard as that of an attorney. This means that you must comply with all of the filing regulations as well as courtroom standing orders+ Read More
The post Filing Bankruptcy Without An Attorney appeared first on David M. Siegel.

It has often been said that you should never do business with friends or family. A bankruptcy court decision that was recently affirmed by the U.S. Court of Appeals for the Sixth Circuit is further evidence of this proposition.  Read More ›
Tags: 6th Circuit Court of Appeals, Chapter 11

 
“Wealth is the transfer of money from the impatient to the patient.”  Warren Buffett
 
Deborah Sutton writes an excellent article in The Desert News about budgeting for the fun things in life. The word “budget” has a negative vibe to it. To budget is to deny yourself, to live within your limited means, and that implies not enjoying as much fun as when you don’t live on a budget. Living on a budget is about as much fun as going on a celery and oatmeal diet.
 

The human brain has a lot psychological resistance to the entire idea of budgeting and dieting,” said financial psychologist Brad Klontz. To purposely cut out enjoyable things creates a sense of depravation and it leads to overspending and overeating.

According to Klontz, establishing a budget with a “Fun Fund” is essential in order to motivate a person to stick to the spending plan.

When people get really excited about a certain goal, like a vacation or a new TV, saving is almost effortless. It becomes fun to do it.

Nobody is going to stick to a high fiber diet that has no flavor, no matter how healthy it is. Burn out is the common problem. The same is true with financial planning—there must be a constant pattern of rewards to make the process palatable. There should be short-term rewards and long-term rewards as well.
The key to making the Fun Fund work is to establish separate bank accounts that are funded with direct deposits each payday. Most payroll departments can directly deposit into 3 or more accounts. If not, your bank can automatically move money from one account to another each payday if you request it.
Another key to making the Fun Fund work is to keep the contribution small. All it takes is $20 per week to be able to purchase a $500 television in 25 weeks. To stay motivated you need to be rewarded. You need to make getting out of debt a game--a fun game. It is also okay to have more than one Fun Fund so that you can finance short-term and long-term rewards at the same time.
Getting out of debt in a marriage takes teamwork. Opposites seem to attract, and most marriages have a miser and a spender personality. The trick to establishing true teamwork is to make sure that each spouse is getting what they need, and that’s never going to happen unless the more impulsive spouse sees a reward for good behavior. Nobody is going to stick to a budget that is all work and no play.
Changing habits is never easy, and the hardest part is the beginning. Learning how to prepay for the fun things is life is a lesson worth learning.
Image courtesy of Flickr and Stephen Ippolito.